San Francisco Is A City Divided … By Technology
World-renowned San Francisco is a city of contrasts: Facebook ( FB )founder and CEO Mark Zuckerberg’s $10 million San Francisco home is less than a block away from territory claimed by a Latino street gang. A billboard near Zuckerberg’s mansion advertises starter homes priced in the “low $1 millions.” In a city of 850,000 people, 100,000 residents have no Internet access, and 50,000 have dialup. The average rent for a one-bedroom apartment is over $3,500 a month, the highest in the U.S. An entry-level software developer/programmer can earn $150,000, while the city’s minimum wage amounts to $25,000. City transit handed out 850 permits for a pilot program to use public bus stops for private commuter shuttles that ferry workers to and from Silicon Valley, while the city itself operates only 800 buses. San Francisco’s sharp divide is taking shape amid the financial euphoria and venture capital frenzy for game-changing startups such as Uber and Airnbnb. But this boom has a character that’s proved more divisive than those of the past. The tech bosses, money men and well-educated workers who have flocked to San Francisco have been called “some of the most ruthless capitalists around,” and they have transformed the city’s character in a few short years. “The historic power center, the traditional political interests in San Francisco have been destabilized by tech becoming very political in San Francisco,” said San Francisco Supervisor Aaron Peskin. “Historically, the landlord industry had power in the city, the traditional Chamber of Commerce had power. But all of them have been eclipsed by the tech juggernaut. It’s as simple as money.” Airbnb Playing Tough Politics Privately held Airbnb — a website that lets people rent their homes and apartments to travelers — is one such recent example of the tech industry’s political influence. During the last election cycle, the company spent more than $9 million to defeat a measure seeking to expand regulation over the firm’s activities in the city (illegal rentals make up 76% of the listings , according to a local news report). Its opponents spent less than $500,000. Ultimately the company defeated the legislation. And according to city data, Airbnb recently added $245,000 to its campaign war chest, days after elected officials announced another legislative effort to more tightly regulate short-term rentals — the bread and butter of Airbnb’s sales. The company did not respond to several requests for comment. Sf.citi, a nonprofit lobby group backed by tech companies and venture capitalists, also declined to comment. To be sure, Airbnb’s business model relies on friendly legislation more than most others do, but the dollar amount of the contributions has raised eyebrows. The tech industry was largely unwilling to discuss the issue on the record with IBD, though some firms issued prepared statements that pointed out charitable donations and volunteer work performed by the companies and their employees. Twitter ( TWTR ) declined to make executives available for comment but provided IBD with a written statement, as did Salesforce ( CRM ) and privately held ride-hailing app Uber. Like Uber, Twitter and Salesforce are based in San Francisco. Salesforce CEO Marc Benioff is a San Francisco native, and his father ran a chain of apparel stores. However, the company would not make Benioff available for comment. Cisco Systems ( CSCO ), Facebook, PayPal ( PYPL ) and privately held companies Dropbox and Stripe are among those that, through spokespersons, declined to comment. S.F. Chamber Sees Divide, Less ‘Engaged’ Demographic But for people in certain jobs, it’s not easy to avoid commenting on a hot-button issue. Jim Lazarus, senior vice president of the San Francisco Chamber of Commerce, pointed to Salesforce’s charitable contributions as an example of how a number of tech companies are giving back to the community. (Salesforce.com, Alphabet ( GOOGL ) and many tech companies are members of the S.F. Chamber.) But he acknowledged that the younger people employed by tech companies are, in general, “not as engaged” in the community as some would like, though he expressed hope that would change. Lazarus concedes there is a divide, stemming from the significant wage disparity between those employed in high-pay tech and those not so employed. “That’s tech in California,” he said. Lazarus says it’s wrong to look at the divide solely through the narrow lens of technology. He says big job growth in sectors such as biotech, health care and education also contribute to the income inequality. And he notes that the services industries also bring some higher-paying jobs for lawyers, accountants and others. “There is a significant professional service economy,” he said. Google Buses Fuel Much Debate Regardless of the complexities of the divide, city residents often express frustration with the high cost of living by protesting — either in court or on the street — one of the most visible symbols of the tech industry’s supposed hubris: the commuter shuttle. The shorthand is “Google buses,” but they are not just shuttles provided by Alphabet’s Google. “At least once a week, someone on the street makes an obscene gesture toward our shuttle,” Genentech employee Michael Stevens wrote to the Board of Supervisors in an email obtained through a public records request by IBD. “I don’t understand this, but I think that kind of behavior is typical of those who resent the shuttles.” IBD obtained more than 1,200 pages of documents about the shuttles, which included dozens of complaints from residents, unions and neighborhood associations. At their core, the idea of the shuttles is to reduce freeway traffic — which is legendary in Silicon Valley — as well as pollution, while also providing a perk to tech employees, of course. Google’s liaison to the San Francisco government, Rebecca Prozan, declined to comment, referring IBD to the press unit, which did not respond to multiple email messages. Of the buses, Lazarus says that they’re a sign that San Francisco is highly desirable place in which to live. “It’s a problem most American cities would love to have,” he said. The shuttles are often the target of derision , however, and longtime city residents say they helped change the character of the neighborhoods, along with the new residents who have moved in. “It’s a top-down, structured environment,” Erich Werner said, referring to how new communities are being planned. Werner is an electrical contractor who has lived in the city for 32 years. “What would keep a hamster happy? In this case, the hamster would need a restaurant, some place to party, some kind of light rail to take them there. All the attention is geared toward analysis and addressing perceived needs of a demographic. That’s conceptual and literal engineering.” More than changing neighborhoods, the influx of young, well-educated tech workers has created a new breed of tech companies that serve a niche of customers in a city that in many ways is not representative of the broader market. “There are a lot of products and services being created for San Francisco, and I’m not sure that’s sustainable,” said Myles Weissleder, who has lived in the Bay Area and worked in technology since the 1990s. He’s founder of SFNewTech, which puts together monthly networking events focused on technology. “Are there efficiencies in private transportation services?,” he said. “Certainly. But there are impacts on neighborhoods, there are costs — all of those little things are impacts, they are unforeseen consequences.” Despite increasing wariness among venture capitalists to fund startups, rents keep rising, and business carries on as usual. But even people connected to the technology industry feel some uncertainty. “These companies will run out of steam,” Weissleder said, “and I foresee some kind of shake-up as the money dries up.”